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The 14 Management Principles from Henri Fayol (1841-1925) are:

1. Division of Work. Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive. 2. Authority. The right to issue commands, along with which must go the balanced responsibility for its function. 3. Discipline. Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership. 4. Unity of Command. Each worker should have only one boss with no other conflicting lines of command. 5. Unity of Direction. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it. 6. Subordination of individual interest (to the general interest). Management must see that the goals of the firms are always paramount. 7. Remuneration. Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system. 8. Centralization (or Decentralization). This is a matter of degree depending on the condition of the business and the quality of its personnel. 9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral communication is also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not be over-stretched and consist of too-many levels. 10. Order. Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The latter is achieved through organization and selection.

11. Equity. In running a business a combination of kindliness and justice is needed. Treating employees well is important to achieve equity. 12. Stability of Tenure of Personnel. Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely. 13. Initiative. Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it may well involve a sacrifice of personal vanity on the part of many managers. 14. Esprit de Corps. Management must foster the morale of its employees. He further suggests that: real talent is needed to coordinate effort, encourage keenness, use each persons abilities, and reward each ones merit without arousing possible jealousies and disturbing harmonious relations.

What is Management? Five elements

Fayol's definition of management roles and actions distinguishes between Five Elements:
1. Prevoyance. (Forecast & Plan). Examining the future and drawing up a plan of action. The elements of strategy. 2. To organize. Build up the structure, both material and human, of the undertaking. 3. To command. Maintain the activity among the personnel. 4. To coordinate. Binding together, unifying and harmonizing all activity and effort. 5. To control. Seeing that everything occurs in conformity with established rule and expressed command.


FUNCTIONS OF MANAGEMENT Different experts have classified functions of management. According to George & Jerry, There are four fundamental functions of management i.e. planning, organizing, actuatinEg and controlling. According to Henry Fayol, To manage is to forecast and plan, to organize, to command, & to control. Whereas Luther Gullick has given a keyword POSDCORB where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are functions of management given by KOONTZ and ODONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling. For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are highly inseparable. Each function blends into the other & each affects the performance of others.



It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of predetermined goals. According to KOONTZ, Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of predetermined goals. Planning is necessary to ensure proper utilization of human & nonhuman resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.
2. Organizing

It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnels. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves:
Identification of activities. Classification of grouping of activities. Assignment of duties. Delegation of authority and creation of responsibility. Coordinating authority and responsibility relationships. Staffing


It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & ODonell, Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure. Staffing involves:



Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place). Recruitment, selection & placement. Training & development. Remuneration. Performance appraisal. Promotions & transfer.

It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:

Supervision Motivation Leadership Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers. Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose. Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction. Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.
5. Controlling

It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of

controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation. According to Koontz & ODonell Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished. Therefore controlling has following steps:
a. Establishment of standard performance. b. Measurement of actual performance. c. Comparison of actual performance with the standards and finding out deviation if any. d. Corrective action.

Evolution of management thought Introduction: Modern managers use many of the practices, principal, and techniques developed from earlier concepts and experience. In 1975, Raymond E. Miles wrote Theories of Management: Implications for organizational behavior and development. In it, he evaluated management includes classical, human relations, and human resources management. __The development of management thought has been evaluated in nature under the following four parts: 1. 2. 3. 4. Pre-Scientific Management Era (before 1880) Classical management Era (1880-1930) Neo-classical Management Era (1930-1950) Modern Management era(1950-on word)

Classical Management: includes 1. Scientific Management School 2. Administration Management school 3. Bureaucracy Management Neo- classical Management: includes 1. Human relation school 2. Behavioral Management School Modern Management: includes

1. 2. 3. 4. 5.

Social system school Decision theory school Quantitative Management school System Management school Contingency Management school.

Bureaucracy Management: Max Weber known as father of modern Sociology analyzed bureaucracy as the most logical & structure for large organization. Features of Bureaucracy Rational authority: This is based on law, procedures, rules, and so on. Positional authority: Positional authority of superior over a subordinate stems from legal authority. Charismatic authority: Charismatic authority stems from the personal qualities of an individual. Principal of Bureaucracy 1. 2. 3. 4. 5. 6. 7. 8. Clearly defined and specialized functions. Use of legal authority; Hierarchical form; Written rules and procedures; Technically trained bureaucrats; Appointment to positions based on technical expertise; Promotions based on competence; Clearly defined career paths.

Scientific Management Frederick Taylor, known as the father of Scientific Management, Published Principals of Scientific Management , in which he proposed work methods designed to increase worker productivity. Scientific Management focuses on worker and machine relationships. Organizational productivity can be increased by increasing the efficiency of production processes. The efficiency perspective is concerned with creating job that economizes on time, human energy, and other productive resources. Job are designed so that each worker has a specified, well controlled task that can be performed as instructed. Principal of scientific management 1. Replacement of old rule of thumb method. 2. Scientific selecting and training. 3. Labor management co-operation.

4. Maximizes output. 5. Equal division of responsibility. Perspective of scientific Management: There are four scientific management systems: 1. Develop a science for each element of the job to replace old rule of thumb method. 2. Scientifically select employees and then train them to do the job as described in step 1. 3 Supervise employees to make sure they follow the prescribed method for performing their job. 4 Continue to plan the work but use worker to actually get the work done. Administrative Management Administrative Management emphasizes the manager and the functions of management. Henri fayol known as the father of modern Management. He wrote General and Industrial Management. His five function of managers were plan, organize, command, co-ordinate, and control. Principal of administrative management 1. 2. 3. 4. 5. 6. 7. 1. 2. 3. 4. 5. 6. 7. Division of labor Authority & responsibility, Discipline, Unity of command, Unity of direction, Subordination of individual interests to general interest, Remuneration of personnel, Centralization, Scalar chain, Order, Equity, Stability of tenure, Initiative and Esprit de crops (union of strength).

Mary parker Folletts concepts included in the administration management that is

The universal goal, The universal principal, Law of the situation: Emphasizes that there is no one best way to do anything, but that it all depends on the situation.

Neo- classical Management: includes

Human relation school Behavioral Management School

Human relation school: Behavioral or human relations management emerged in the 1920s and dealt with the human aspects of organizations. It has been referred to as the neo-classical school because it was initially a reaction to the shortcoming of the classical approaches to management. The human relations movement began with the Hawthorne studies. The Hawthorne studies are significant because they demonstrated the important influence of human factors on worker productivity. There are four major phases to the Hawthorne studies: 1. The illumination experimen : Tried to determine whether better lighting would lead to increased productivity. 2. The real assembly group experiments 3. The interviewing program and 4. The bank wiring group studies. Chester Barnard Record his insights about Management in his book function of Executive. It outlined the legitimacy of the supervisors directive and the extend of the subordinates acceptance. Barnard taught that the three top functions of the executive were to 1. establish and maintain an effective communication system, 2. Hire and retain effective personnel 3. Motivate those personnel. His Acceptance Theory of authority state that managers only have as much authority as employees. The acceptance of authority depends on four conditions. 1. 2. 3. 4. Employees must understand what the manager wants them to do. Employees must be able to comply with the directive. Employees must think that the directive is in keeping with organizational objectives. Employees must think that the directives are not contrary to their personal goal.

Behavioral Management schoo : Behavioral Management schoo : The behavioral approach did not always increase productivity. Thus, motivates and leadership techniques became a topic of great interest. The human resources school understands that employees are very creative and competent, and that much of their talent is largely untapped by their employers. Employee want meaningful work; they want to contribute; they want to participate in decision making and leadership functions.

Meaning of principles: Principle is the tested guide lines for a certain course of action .In another way a principle can be defined as a fundamental statement of truth providing a guide to thought and action. We can also say that it is a statement which reflects the fundamental truth about some phenomenon. A fundamental statement tells us what results are expected when the principle is applied. Nature of management principle: 1. Flexibility 1. 2. 3. 4. Universal application Principal are relative not absolute Based on situation General statement.

Modern Management concept Modern Management concept mainly divided into two classes:-1.Decision theory schoo : Herbert Simon, Glurk and lyndall urwick the major contributors to this school of thought. The main features of this theory are as follow:-1. 2. 3. 4. Decision is central to the study of organization. The organization effectiveness depends on the quality of decision. All factors affecting decision making are the subject matter of the study of Management. The member of the organization is decision makers and problem solvers.

Contingency Management school / Situational approach: The latest approach to management which interact the various approaches to management is known as the contingency approach or open and adaptive systems approach. The work of Joan Woodward in the 1950s marked the beginning of this approach in management. Contingency school states that management is situational & the study of management lies in identifying the important variables in the situation. It recognizes that all the subsystem of the environment are interconnected and interrelated. By studying their interrelationship, the management can find solution to specific situation. Emerging Management position :

New management viewpoints are emerging. Quality management emphasizes achieving customer satisfaction by providing high quality goods & services.

Classical and Neo-Classical Theories of Management Classical management theory There are three well-established theories of classical management: Taylor,s Theory of Scientific Management, Fayols Administrative Theory, Webers Theory of Bureaucracy. Although these schools, or theories, developed historical sequence, later ideas have not replaced earlier ones. Instead, each new school has tended to complement or coexist with previous ones. Theory recognizing the role that management plays in an organization. The importance of the function of management was first recognized by French industrialist Henri Fayol in the early 1900s. In contrast to the purely scientific examination of work and organizations conducted by F W Taylor, Fayol proposed that any industrial undertaking had six functions: technical; commercial; financial; security; accounting; and managerial. Of these, he believed the managerial function, to forecast and plan, to organize, to command, to coordinate, and control, to be quite distinct from the other five. Fayol also identified general principles of management: division of work; authority and responsibility; discipline; unity of command; unity of direction; subordination of individual interest to general interest; remuneration of personnel; centralization; scalar chain of authority; order; equity; stability of tenure of personnel; initiative; and esprit de corps. Fayol's views on management remained popular throughout a large part of the 20th century.

Evolution of Classical Approach to Management Traditional process of learning is either through obsevation and experiment. Nature or environment is considered uniform and when we observe certain phenomenon or events uniformly leading to the same result or results, we conclude a cause and effect relationship between the two. This is learning by observation or in other words by experience. Earlier thinkers on management followed this approach in developing theories of management. Learning principally is through emphirical process and through analysis of the data collected through observation. Draw the principles of managment by looking at and anyalysing the jobs that all managers commonly do. This approach served as a starting point for pioneers on management science to verify the validity and improve the applicability of the principles and

practices of management. Analysis of observd data is what constitute a case study. The observational method of case study helps arriving at logical conclusions about past experience and to test the same as standards for future events. The German sociolists, Max Weber followed the classical approach and developed his theory of Bureaucracy, which portrays the structure anddesign of organisation charqacterised by a hierarchy of authority, formalised rules and regulations that serve to guide the coordinated functioning of an organization. Basic Postulates of the Classical Approach by Max Weber 1. Management of an organization is considered as a chain of inter-related functions. The study of the scope and features of these functions, the sequence through which these are performed and their inter-relationship leads one to draw principles of management suitable for universal application 2. Learning principles of management is done through the past experiences of actual practicing managers 3. As business environment consists of uniform cycles exhibiting an underlying unity of realities, functions and principles of management derived through process of empirical reasoning are suitable for universal application 4. Emerging new managers through formal education and case study can develop skill and competency in management concepts and practices 5. The clasasical approach also recognised the importance of economic efficiency and formal organizational structure as guiding pillars of management effectigveness. 6. Business activity is based on economic benefit. Organizations should therefore control economic incentives Neoclassical theory of management There are 3 neoclassical theories: Human Relations theory : Explains the modern advancement of Human Relations Management theory which takes into account human factors like the employer-employee relationship. Human relations theory is largely seen to have been born as a result of the Hawthorne experiments which Elton Mayo conducted at the Western Electrical Company. The important strand in the development of modern management was the increase in attention to the human factors, which has become known as the 'human relations school of management. The core aspect of Human Relations Theory is that, when workers were being observed and

included in the research, they felt more important and valued by the company. As a result, their productivity levels went up significantly. This represented a significant departure from many of the classical theories, particularly Fordism, as it went against the notion that management needed to control workers, and remove their autonomy at every step. Instead, it showed that by engaging with workers and considering their requirements and needs, companys could benefit from increased productivity. Behavioral theory : The behavioral management theory is often called the human relations movement because it addresses the human dimension of work. Behavioral theorists believed that a better understanding of human behavior at work, such as motivation, conflict, expectations, and group dynamics, improved productivity. The theorists who contributed to this school viewed employees as individuals, resources, and assets to be developed and worked with not as machines, as in the past. Several individuals and experiments contributed to this theory. Social systems theory.: Developed by Niklas Luhmann is an option for the theoretical foundation of Human Resource Management (HRM). After clarifying the advantages of using a grand (social) theory as the basic theoretical perspective, the roots of this social systems theory - the deterministic view of systems as machines, the open systems approach and non-linear systems theory - are addressed. Based on the view of social systems as autopoietically closed systems, five major contributions to a theoretical foundation of HRM are identified: (1) the conceptualisation of organising and managing human resources as social processes, thus overcoming an individualistic angle; (2) the new importance of individuals as essential element in the system's environment; (3) the abstention form far reaching or highly unrealistic assumptions about the 'nature' of human beings; (4) the interaction between various levels and units of analysis built into the theory which is essential for comprehensive and in-depth analyses of HR phenomena and (5) the openness for additional theories for which social systems theory provides the overall framework. George Elton Mayo was in charge of certain experiments on human behavior carried out at the Hawthorne Works of the Western Electric company in Chicago between 1924 and 1927. His research findings have contributed to organizational development in terms of human relations and motivation theory. Elton Mayo's contributions came as part of the Hawthorne studies, a series of experiments that

rigorously applied classical management theory only to reveal its shortcomings. The Hawthorne experiments consisted of two studies conducted at the Hawthorne Works of the Western Electric Company in Chicago from 1924 to 1932. The first study was conducted by a group of engineers seeking to determine the relationship of lighting levels to worker productivity. Surprisingly enough, they discovered that worker productivity increased as the lighting levels decreased that is, until the employees were unable to see what they were doing, after which performance naturally declined. A few years later, a second group of experiments began. Harvard researchers Mayo and F. J. Roethlisberger supervised a group of five women in a bank wiring room. They gave the women special privileges, such as the right to leave their workstations without permission, take rest periods, enjoy free lunches, and have variations in pay levels and workdays. This experiment also resulted in significantly increased rates of productivity. In this case, Mayo and Roethlisberger concluded that the increase in productivity resulted from the supervisory arrangement rather than the changes in lighting or other associated worker benefits. Because the experimenters became the primary supervisors of the employees, the intense interest they displayed for the workers was the basis for the increased motivation and resulting productivity. Essentially, the experimenters became a part of the study and influenced its outcome. This is the origin of the term Hawthorne effect, which describes the special attention researchers give to a study's subjects and the impact that attention has on the study's findings.

Reengineering the organization redesigns the processes that are crucial to customer satisfaction.